Inflation has slowed in Turkey for the first time in eight months

According to the Statistical Institute of Turkey (Turkstat), in June, the growth rate of consumer prices decreased to 71.6% year-on-year, compared with 75.45% in May. This was the first slowdown in inflation in the last eight months.

The consensus forecast of experts assumed a less significant decrease in growth rates – up to 72.6%.

The growth rate of prices for food and non-alcoholic beverages in June decreased to 68.08% compared with 70.14% in May, and for transport services – to 65.67% from 79.1%. Prices for furniture and household goods increased by 67.72% (compared with 69.34% in May), for clothing and shoes – by 47.84% (compared with 50.85%). Prices in hotels, cafes and restaurants increased by 90.67% (compared to 92.94%). The growth rate of the cost of utilities accelerated to 94.72% in annual terms compared with 93.21% a month earlier.

The June increase in consumer prices compared to May was 1.64%, which is the lowest since May 2023. In May, the monthly growth was 3.37%.

Core inflation, excluding the cost of food, energy, alcohol, tobacco and gold, was 70.4% year-on-year and 1.9% month-on-month in June. In May, these figures were 72.99% and 3.77%, respectively.

Producer prices (PPI index) in June increased by 50.09% year-on-year and by 1.38% month-on-month. In May, the growth was 57.68% and 1.96%, respectively.

The slowdown in inflation indicates the effectiveness of tightening monetary policy in Turkey. The Central Bank of the country has been keeping the key interest rate at 50% since March. In June 2023, the rate was 8.5%.